Lubbock real estate market opens 2013 on a high note

Drop in inventory results in residential shift to seller's market

For the first time in several years, the Lubbock real estate market’s existing months of inventory for December dropped below 1,300 homes or 4½ months and officially transitioned from a buyer’s to a seller’s market, carrying last year’s strong recovery trend into 2013.

“The greatest comparison component of 2012 is the previous year’s months of inventory, or homes listed currently on the market,” said Coby Crump, who will serve as the 2013 president of the Lubbock Realtors Association.

However, he said, those expectations need to be kept in perspective.

“Last year, during this period, the Lubbock market had enough homes listed to supply the purchase demand for the next 6½ months,” Crump said. “To date, we only have enough inventory to support approximately 4½ months of sales.”

That amounts to a decrease in inventory of about 30.8 percent.

Lubbock traditionally maintains a balanced market, according to Crump, but began tilting toward a buyer’s market about 11 months ago due to increased inventory. With recent residential purchase increases, investor purchasing, low interest rates and a good selection of available properties, that inventory supply has quickly decreased, resulting in a rapid climate change and the shift back to a seller’s market.

“We would actually like to see some more homes on the market,” Lubbock Realtors Association executive Cade Fowler said. ”This is the first time in several years that the inventory has dropped below 1,300. What is important about the amount of inventory is simply supply and demand.

“The buyer’s market and seller’s market are directly affected and fueled by the number of months’ inventory. Those terms describe the market conditions favoring one party, the buyer or seller, over the other. A balanced market is obtained at about six months of inventory, midway on a balancing scale.”

The commercial segment of the Lubbock real estate market, often overshadowed by the residential sector, has echoed the residential recovery trend with significant increases in recent activity.

“There has been really good movement in commercial property and the number of properties that are under contract,” said Gayle Ninemire, broker associate for Prudential Anderson Properties. “The commercial market is where all the significant growth really starts. A solid commercial market will bring jobs, commercial development and new construction.”

The local commercial real estate market closed out 2012 at $51,746,466 in total sales. Two sizable non-residential land sales of more than $1 million were posted in the month of December alone.

Total residential dollar volume increased 29.3 percent from $32,436,160 in December 2011 to $41,940,836 this year, and the year-to-date total residential dollar volume increased 23.1 percent from $422,097,477 in 2011 to $519,570,551 for 2012.

While all the indicators seem to point to a strong 2013 housing market that has local insiders excited, Crump maintains a balanced perspective.

“We must keep in mind that last year’s numbers were down,” he said. “The national economic statistics show November 2011 as one of the low points of the recession.”

Although the Lubbock market was also down last year compared to previous years, on a whole it has been protected from the bulk of the national recession with a steady economy, better-than-average unemployment rate and steady home sales, according to Crump.

December residential property sales increased to 275, up 22.8 percent from 224 the same month last year.

The median single-family home price increased 4.6 percent over the last year from $119,450 to $124,900.

“We ended 2012 very strong and we believe it will continue into 2013,” Fowler said. “It’s very good to see the under contract listings being up almost 50 percent, even though people are having to deal with more regulations to get a mortgage.”

Though history has proven the real estate market is often unpredictable, optimism abounds due to the timing of the shift to a seller’s market.

“All of this is very motivating because it is taking place during what is normally our lowest sales quarter,” Crump said. “It does not follow traditional statistical paths. We will have to study the next few months’ progression before we can actually make the call, but we eagerly look forward to a fantastic year in Lubbock real estate.”

Ninemire added, “We are going to have an amazing spring. I hope everybody has their track shoes on. I have a feeling we are going to need them.”